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Equilibrium Selection and Public-good Provision: The Development of Open-source Software


  • David P. Myatt
  • Chris Wallace


Collective-action problems arise in a variety of situations. Open-source software is a recent and important example. Copyright restrictions on open-source projects stipulate that any user may modify the software so long as any resulting innovation is freely available to all. In economic parlance, the innovation is a public good. The economic theory of public-good provision raises a number of important questions. Who contributes to such a project, and who free rides? How might a social planner exploit the interdependence of project components to encourage contributions? Under what conditions will such actions result in successful provision? Using a simple game-theoretic framework and recent results from the study of equilibrium selection, we attempt to answer these questions. Under reasonable assumptions of asymmetry and less than complete information, the most efficient providers will contribute. Contributions can be elicited by 'integrating' the provision process when providers are sufficiently optimistic about the success of the project. Otherwise, the social planner may be better off 'separating' the components so that individual contributions are independent of each other. The analysis yields recommendations for the leaders of open-source projects and other similar collective-action problems. Copyright 2002, Oxford University Press.

Suggested Citation

  • David P. Myatt & Chris Wallace, 2002. "Equilibrium Selection and Public-good Provision: The Development of Open-source Software," Oxford Review of Economic Policy, Oxford University Press, vol. 18(4), pages 446-461.
  • Handle: RePEc:oup:oxford:v:18:y:2002:i:4:p:446-461

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    References listed on IDEAS

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    Cited by:

    1. David P. Myatt & Chris Wallace, 2003. "Evolution in Teams," Economics Series Working Papers 177, University of Oxford, Department of Economics.
    2. Bitzer, Jürgen & Geishecker, Ingo, 2010. "Who contributes voluntarily to OSS? An investigation among German IT employees," Research Policy, Elsevier, vol. 39(1), pages 165-172, February.
    3. Juergen Bitzer & Ingo Geishecker & Philipp Schroeder, 2010. "Returns to Open Source Software Engagement: An Empirical Test of the Signaling Hypothesis," Working Papers V-321-10, University of Oldenburg, Department of Economics, revised Jan 2010.
    4. Dongryul Lee & Byung Kim, 2013. "Motivations for Open Source Project Participation and Decisions of Software Developers," Computational Economics, Springer;Society for Computational Economics, vol. 41(1), pages 31-57, January.
    5. Bitzer, Jurgen & Schrettl, Wolfram & Schroder, Philipp J.H., 2007. "Intrinsic motivation in open source software development," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 160-169, March.
    6. Gauguier, Jean-Jacques, 2009. "L’industrialisation de l’Open Source," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/4388 edited by Toledano, Joëlle, March.
    7. repec:zbw:hohpro:321 is not listed on IDEAS
    8. Pekka Sääskilahti, 2016. "Buying Decision Coordination and Monopoly Pricing of Network Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(2), pages 313-333, April.
    9. Bitzer, Jurgen, 2004. "Commercial versus open source software: the role of product heterogeneity in competition," Economic Systems, Elsevier, vol. 28(4), pages 369-381, December.
    10. Makris, Miltiadis, 2009. "Private provision of discrete public goods," Games and Economic Behavior, Elsevier, vol. 67(1), pages 292-299, September.
    11. repec:old:wpaper:321 is not listed on IDEAS

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